While that is definitely at play there is a deep rooted instinct in humanity to show status and to have something that is worth a lot. It goes beyond just marketing, which is why it "works" economically. I think the luxury market serves a certain type of mindset that has been there since ancient egypt even. It would be nice to have a society where status didn't pay a role but there hasn't been a social movement that has crystallized what that would look like.

I also think as a sidenote there is a difference between luxury and fashion. Fashion is about creativity and self expression, and for a long time, the luxury market was sort of the defacto place for creeativity rather than the cheaper labels that had more 'standard' clothing, at least where I live. That has changed a bit in the past decade though. I like both fashion and luxury, but I am conflicted about it too. For example in the luxury fashion world there is a thing called 'grails', which are essentially items that are difficult to get but are considered very cool looking in some way and so they become grails. A lot of people like the feeling of chasing and finally acquiring grails, so that's one aspect of it.